Which of the following items is shown in the notes to accounts on finance cost while preparing income statement of a company?

A) Interest paid on bank overdraft
B) Interest paid on borrowings
C) Interest received on term deposits
D) Interest paid on debentures
E) Interest paid on term loan

ABDE

The correct answer is option 2- ABDE.

A) Interest paid on bank overdraft- Finance cost
B) Interest paid on borrowings- Finance cost
C) Interest received on term deposits- Other income
D) Interest paid on debentures- Finance cost
E) Interest paid on term loan- Finance cost

Finance costs are the expenses towards interest charges incurred in the year on the borrowings of the company. Only the interest cost is to be shown under finance cost. Bank charges are shown under Other Expenses because these are incurred for arranging finance. Interest received is not a cost but an income, that's why it is not included in finance cost.